In the case of a company acquiring another, an interesting component of a company's balance sheet is "goodwill. However, what is goodwill in accounting and why is it important to investors? Goodwill typically occurs when a company buys another business for more than the identifiable net assets have a fair value. This added value may be due to brand reputation, customer loyalty or future growth prospects. Goodwill is a useful tool for business owners when assessing their acquisitions and reading their financial statements. What do you believe are the implications of goodwill on the overall value of a company?
